Avoiding four common billing mistakes

When it comes to billing, accuracy is critical. Incorrect data on initial claims creates a domino effect that frequently leads to delayed reimbursements or outright denials. Preauthorization adds yet another layer of complexity to the process and can also result in denials if not obtained when required.

To keep denial rates within the industry benchmark of 3% or less of revenue, physician practices should evaluate their billing and collection processes to identify whether they are making any of the following mistakes that can increase denials, slow reimbursements, and affect the revenue cycle.

1. Failing to resolve A/R promptly

Unresolved accounts receivable (A/R) can severely damage a physician practice’s financial health, disrupting cash flow and creating a gap between revenue earned and revenue received. Not only that, but aged A/R—typically 90 days or older—is less likely to be collected. It also increases bad debt, with aged accounts often ending up in collections where recovery rates are low and associated fees are high.

Diverting staff resources to handle collections and appeal denials means fewer resources dedicated to patient care. Poor cash flow can also delay necessary investments in technology, staff, and facility improvements. Compliance concerns also come into play.

To avoid A/R backlogs, monitor several key metrics:

• Days in A/R: A good benchmark is to keep them below 40 to avoid liquidity issues.
• A/R Aging Buckets: The percentage of A/R older than 90 days should stay at or below 10%, and anything above 15–20% is a red flag.
• Denial Rate: High denial rates often correlate with poor A/R performance and signal systemic issues.

2. Delaying provider credentialing

Delayed credentialing can cost practices tens of thousands of dollars per physician or other provider—and losses accumulate rapidly, particularly in high-volume specialties such as primary care, cardiology, and orthopedics. Other estimates place the loss at $1,000 to $2,500 per day for each new provider seeing patients but unable to submit claims due to incomplete payer enrollment.

For a mid-sized practice onboarding five to 10 providers annually, delays could easily exceed $100,000 in lost revenue per year, a sizable portion of which cannot be recovered. While Medicare allows retroactive billing for up to 30 days before application approval, most commercial insurers do not. Weak credentialing processes also increase compliance risk, damage payer relationships, and can affect provider morale and retention.

The credentialing problem typically stems from incomplete applications, record discrepancies, and slow internal processes caused by manual tracking, a lack of automation, or insufficient staff. It’s a preventable revenue cycle obstacle that can be easily rectified by implementing a robust physician credentialing process and assigning responsibility for ensuring it is followed. Also, start the credentialing process early—up to four months before a physician’s start date—and implement systems to track deadlines and the status of all applications.

3. Improper coding

Improper medical coding costs U.S. physician practices thousands to millions of dollars annually, contributing to an estimated $36 billion in lost revenue across the health care system due to denied claims, underpayments, and penalties. Average denial rates range from 5% to 11%, depending on specialty and payer mix, totaling hundreds of denied claims and thousands of dollars in lost or delayed revenue per month.

The most common mistakes are:

1. Upcoding or downcoding, which can lead to audits, fines, and clawbacks.
2. Missing modifiers, incorrect CPT codes, or mismatched diagnoses often result in automatic denials.
3. Documentation gaps, which can prevent reimbursement if coding doesn’t align.

Not only do these errors delay reimbursements, but correcting and resubmitting them and handling appeals consume valuable resources. Not to mention the heightened compliance risks.

To minimize coding errors, invest in coding audits, staff training, and automation tools. Additionally, implementing processes to monitor denial trends and correct root causes proactively can improve revenue cycle efficiency by 10%-20%.

4. Not tracking denial data

This segues into the fourth common billing error: failing to track and analyze key performance indicators related to denial data, which can lead to significant revenue loss, operational inefficiencies, and missed opportunities for system improvements.

Denial rates affect 10%–15% of all submitted claims, and many practices report a 17% year-over-year increase in denials. Without tracking, practices can’t identify recurring issues, like coding errors or authorization failures, that lead to preventable denials and write-offs. There are also operational consequences, including an increased administrative burden that diverts resources from patient care and delayed cash flow.

To track denials, start with a root cause analysis to identify patterns such as denials by payer, procedure, or provider, which enabled targeted training and process corrections. From there, implement ongoing monitoring of KPIs, including:

• Denial Rate: Percentage of total claims denied. A healthy benchmark is typically under 5–10%.
• First Pass Resolution Rate: Percentage of claims paid on first submission. Higher rates indicate cleaner claims and better front-end processes.
• Top Denial Reasons: Categorized by Claim Adjustment Reason Codes (CARCs) and Remittance Advice Remark Codes (RARCs). This helps pinpoint issues like missing documentation, eligibility errors, or authorization failures.
• Denial Volume by Payer: Identifies which payers are driving the most denials and whether contract terms or payer-specific workflows need review.
• Denial Rate by Provider or Location: Flags training gaps or workflow inconsistencies across teams or sites.
• Days to Denial Resolution: Measures how long it takes to resolve denied claims. Shorter cycles improve cash flow.
• Appeal Success Rate: Percentage of denied claims that are successfully overturned. Low rates may indicate poor documentation or ineffective appeal strategies.
• Denial Write-Off Rate: Percentage of denied claims ultimately written off. High rates suggest missed recovery opportunities or systemic issues.
• Recurring Denials: Tracks repeat denials for the same reason or CPT code. Indicates unresolved root causes.
• Preventable Denials: Percentage of denials that could have been avoided with better front-end processes (e.g., eligibility checks, authorization).
• Denial Trends Over Time: Month-over-month or year-over-year changes in denial patterns. Useful for forecasting and strategic planning.

Tracking these metrics and taking action when indicated can reduce revenue leakage, improve cash flow, and guide denial-prevention strategies. It can also help prioritize automation investments and can even strengthen payer relationships and negotiation positions.

Strengthening the revenue cycle

A strong revenue cycle depends on vigilance, expertise, and proactive management. Each of the five common billing mistakes outlined above—delayed A/R resolution, slow credentialing, improper coding, lack of denial tracking, and insufficient subject matter expertise—represents a preventable risk that can erode financial performance and compromise compliance. By recognizing these pitfalls and implementing structured processes, practices can reduce denials, accelerate reimbursements, and maintain healthier cash flow.

Ultimately, billing accuracy is a strategic imperative that sustains the practice’s ability to invest in staff, technology, and patient care. Physician practices that prioritize training, automation, and expert oversight will be better positioned to meet industry benchmarks, strengthen payer relationships, and safeguard long-term financial stability. In an environment where margins are tight and regulatory scrutiny is high, avoiding these common mistakes is essential to ensuring both operational efficiency and practice growth

Debra Stall is the senior vice president of transitions with AGS Health.